PDS Sustainet Publication India Part2

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2 Organic agriculture2 Organic agriculture2 Organic agriculture3 Managing land and water2 Organic agriculture2 Organic agriculture2 Organic agriculture3 Managing land and water4 New productts, new markets2 Organic agriculture2 Organic agriculture2 Organic agriculture3 Managing land and water2 Organic agriculture2 Organic agriculture2 Organic agriculture3 Managing land and water4 New productts, new markets

Linking tea farmers with markets

Peermade Development Society, Kerala

FARMING IS A HIGHLY seasonal business. Governed by the annual cycle of monsoon and

dry, summer and winter, particular crops mature and are harvested at the same time.

Today, there are mounds of mangoes in the market. Next week there is a glut of ginger. The

following month comes a tidal wave of tomatoes.

The market cannot absorb these sudden surges in supply. Prices plummet. Farmers are

forced to sell at a loss, or must watch their crops rot in piles by the roadside or unharvested

Farmers can do little to avoid this tyranny of the seasons: if they plant their crop any ear-

seeds.

Tea is no exception to this iron rule – as the small-scale farmers of Idukki, the largest district

September. The farmers used to carry their freshly plucked young, green leaves to the pri-

price for each sack. The farmers had no choice: the leaves had to be plucked within a certain

period, or they would be too old. Fresh tea leaves are perishable: they must be processed

immediately after harvest, or they become worthless. The market for tea was controlled by

big plantation owners and private factories. Because tea is a perennial crop, the farmers were

trapped: uprooting their bushes would mean losing years of investment.

Peermade Development Society

Peermade Development Society (PDS), an NGO founded in 1980, has helped Idukki’s farm-

ers overcome this predicament. It has helped them establish a consortium that runs its own

tea factory, producing organic tea for the European market. This is how it happened.

PDS has operated in Idukki District, the second-largest but least developed district in Kerala,

since 1980. It was well aware of the problems faced by the district’s tea farmers through its

each village. These councils also coordinate self-help groups of farmers. These groups run

savings schemes, and members help each other do heavy work on their farms.

In 1998, PDS conducted a series of participatory appraisals with these self-help groups. The

group members discussed the problems they faced in small-scale tea farming and discussed

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Biodiversity-based sustainable agriculture – Navdanya, UttaranchalPyalaram community gene fund – Deccan Development SocietyRealizing the potential of organic agricultureWhy watershed management?Biodiversity-based sustainable agriculture – Navdanya, UttaranchalPyalaram community gene fund – Deccan Development SocietyRealizing the potential of organic agricultureRealizing the potential of land and water managementLinking small-scale farmers to marketsBiodiversity-based sustainable agriculture – Navdanya, UttaranchalPyalaram community gene fund – Deccan Development SocietyRealizing the potential of organic agricultureWhy watershed management?Biodiversity-based sustainable agriculture – Navdanya, UttaranchalPyalaram community gene fund – Deccan Development SocietyRealizing the potential of organic agricultureRealizing the potential of land and water managementLinking tea farmers with markets – Peermade Development Society, Kerala

ways to overcome them. The ideas of switching to organic tea production, forming a con-

sortium and building their own factory came out of these discussions.

Why organic? The farmers were playing a lot for chemical fertilizers. But the area has many

trees and other vegetation, so there was more than enough material to make compost. Plus,

scale farmers to compete. Organic tea offered a niche market that promised to be highly

advise the farmers on how to switch.

The Sahyadri Tea Farmers’ Consortium

As a result of these discussions, the farmers together decided to form the Sahyadri Tea Farm-

ers’ Consortium, named after the Sahyadri Hills, or Western Ghats, where Idukki district

spices that it promotes.

Organic tea fetches a premium price in the market. To ensure that the farmers (rather than

factory to process the members’ leaves.

PDS helped obtain the funding to build a state-of-the-art factory at Valanjanganam, in Peer-

made. Several partners supported the construction: the European Union, Naturland e.V., (a

German NGO promoting natural farming and organic practices), Equal Exchange (a British

NGO), and Verein Familien Partner Kerala (Austria). This covered one-third of the factory

from local banks. The factory is owned jointly by PDS and the Consortium.

The Sahyadri Organic Tea Factory was opened in November 2003 by a member of the Indian

National Planning Commission. It currently serves nearly 1200 smallholder tea growers, but

has a production capacity of 800 tons of made tea a year, so can serve more than 10,000

group of organic farmers.

The factory complies with organic quality standards set by the Indian government, the Eu-

ropean Union, the United States and Japan, as well as by Naturland.

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Purchasing and selling tea

The factory implements a closed purchase system: it takes tea only from registered organic

farmers who are members of the consortium. It guarantees the farmers a price 30–70%

above the open market rates (the actual level depends on the season). This ensures a regular

supply of quality green leaves from the farmers.

situation of the growers, their families and the community. So the Consortium earmarks

itself decides how this money will be spent.

The factory is now in the process of establishing markets both locally and in Belgium, Spain,

the United Kingdom and other countries.

Quality assurance and training

its markets. It does this through an internal control system headed by a manager stationed at

the tea factory, and six inspectors posted at the 5 zonal headquarters in the district. Members

of this team travel continuously to each of the grower villages. They advise farmers in all

activities from input preparation until the leaves are harvested. They monitor the procure-

ment of tea by the Consortium, as well as production and marketing.

Figure 13 Every year, more farmers in Idukki are converting to organic production

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The team trains farmers in various subjects, including bookkeeping, the standards required

for organic farming, organic and biodynamic farming practices, various aspects of tea culti-

vation, the use of botanical pesticides and biocontrol agents, pest and disease surveillance,

the application of organic manure and vermicompost, and good harvesting and post-harvest

Women play a key role in tea production and harvesting. They also are involved in manage-

ment: the women’s development wing of the Consortium plans the development projects that

are paid for by the FairTrade premium. These projects include educating children, creating

public utilities such as drinking water, providing services such as medical care, and installing

computers for use in education and community welfare.

The women are also responsible for upgrading the quality of the harvested leaf and improv-

ing the standards of organic cultivation.

Structure of the Consortium

The Consortium is a registered body with its own bylaws. It functions as an umbrella federa-

tion of 51 separate village-level groups, composed of nearly 1200 members, who farm a total

area of nearly 800 ha – so each member farms less than a hectare of tea (Figure 14).

Unit committees Each village-level group, or unit, has between 20 and 40 members. They

elect a committee consisting of a president, secretary and three model farmers. The internal

inspector of that region also sits on the unit committee, and can overrule decisions by the

committee if necessary.

Zonal and central committees The presidents of the unit committees in a zone form

a zonal committee, which coordinates and plans activities within that zone. The presidents

a whole. This central committee monitors the tea collection in the villages, payment to the

farmers, and quality at the farm level. In addition, the central committee reviews activities

of the zones and approve their development plans.

Central approval committee This committee coordinates the activities of the factory

and the Consortium. It consists of the Consortium president and vice-president, the fac-

standards for cultivation and harvesting, admits new members, imposes sanctions based

development plans.

Box 22).

But because the Sahyadri factory pays more for the green leaf, the private factories were

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Box 22 Before and after the formation of the Sahyadri Tea Farmers’

Consortium

Before Now

•

factory owners

•

They process the tea in their own fac-

tory

•

their produce for throwaway prices

• The farmers get an assured price irre-

spective of the season

• Price of tea based on the Cochin Tea

Auction

•

tea in different seasons and negotiated

price at the established regular markets

for tea

• No uniform quality of plucked leaves • Consortium staff train farmers and moni-

tor uniform quality of plucked leaves

• No training on tea cultivation or organic

farming

• Periodic training on cultural methods

and organic farming practices

• Prices below the current market price •

• • -

munity development

• -

cation

•

of PDS

• Inputs purchased individually; high

cost

• Inputs purchased by the Consortium in

bulk; low cost

Figure 14 Structure of the Sahyadri Tea Farmers’ Consortium

Families

Consortium

Zonal committee Zonal committee Zonal committee

Unit

committee

Unit

committee

Unit

committee

Unit

committee

Unit

committee

Unit

committee

Unit

committee

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also forced to raise the prices they paid. A comparison with Connoor, a tea-growing district

in Tamil Nadu with many smallholder growers, show this well: in Connoor, prices of green

factories in the project area never went below Rs 4.50.

Every year more and more farmers in Idukki are converting to organic farming. By 2010, it

is planned to make all 10,000 small-scale tea growing farmers in the district organic. Once

the factory reaches break-even (forecast in another 3.5 years, when enough farmers have

In the year from April 2004 to March 2005, the Consortium bought nearly 1500 tons of

green leaves from the farmers through the Consortium, and processed this to produce 332

tons of made tea. In the past 1½ years, the farmers have earned about Rs 15,000,000 (nearly

loan scheme for the Consortium members with the State Bank of India; this distributed Rs

Farmers have documented their daily farm activities, so have a better idea of their farm busi-

the entire community.

Perhaps most important, the farmers are experiencing the power of unity. They now have

the strength to compete in the market without being exploited by private factory owners and

middlemen. The days of external dependency are over.

Challenges

The Consortium faces various challenges in the years ahead.

• Competition from private factories The private factories may raise the prices they

offer to the Idukki farmers – perhaps just for a short time – in order to deprive the

Sahyadri factory of its supply of fresh leaves.

• Domestic market There is no ready market for organic produce in India. The domestic

market needs to be established.

• Conversion costs

as organic. During this period, their produce cannot be sold as organic – so the Sahyadri

factory will not accept it. The farmers’ yields also decline for a couple of years before

they recover as a result of the improved organic practices. The farmer risks losing income

during this transition period.

• Capital investment A sizeable capital investment is required to establish a processing

plant. Small cooperatives are unlikely to be able to raise the money needed on their own

– they need outside assistance to do so.

• Cost of monitoring and technical support Continuous monitoring and technical

a large number of smallholders than it would be on a single large estate.

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The product: delicious.

organic Sahyadri tea!

Foreign FairTrade markets

Tea sellers

Local tea wholesalers

Sahyadri tea factory

Idukki tea growers

Figure 15 The Sahyadri Tea Farmers’ Consortium processes and markets tea produced by

farmers in Idukki District

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Lessons and recommendations

• Seek guaranteed markets for organic produce Because of the costs of organic

reasonably assured.

• Form groups to increase negotiating power Individual small-scale farmers have

very little negotiating power and cannot hope to compete with larger producers. They

can only increase their negotiating power if they organize themselves into groups or

cooperatives. The most appropriate model for such groups will depend on the local

situation and the type of produce.

• Build markets for organic produce There are no certifying agencies for Indian

standards. Until such agencies are established, a solution might be for groups of farm-

ers who do not use pesticides or other chemical inputs merely to announce that they are

• Include cost of services in price

etc., are needed to sell products in export markets. The facilitating agencies should not

exit the programme, as this would strand the farmers without their vital support. This

means that the price of the product must support the costs of these services.

• Build strong institutions Strong institutional arrangements, both among the farmers

and between the farmers and their partners in the value chain, are essential if the organic

programme is to be sustainable.

More information: Joseph Mathew or Sabu M Simon, Peermade Development Society

[email protected], [email protected], www.pdspeermade.com, www.pdsorganicspice.com

PDS Sustainet Publication India Part2

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